HMRC’s £8.9bn target branded ‘over-optimistic’ by the NAO

HM Revenue and Customs (HMRC) spent £98m on two tax collection projects which failed to bring in extra revenue and resulted in ‘no added benefits’…

It’s a new embarrassment for HMRC as the National Audit Office’s (NAO) latest report branded HMRC’s target of collecting an additional £8.9bn in tax by 2014/2015 as ‘over-optimistic’ and stated that the Revenue will fail to reach the target previously projected.

The NAO have pointed the finger at two information communication technology (ICT) case management projects for the failure – Caseflow and Spectrum – and reported that HMRC failed to bring in “any additional benefits” through both projects which were funded with £98m.

Caseflow and Spectrum ICT projects were hoped to bring in £743m in tax by the last financial year, but failed to hit key delivery mileposts.

Despite criticisms the NAO report also found that HMRC had improved their stance on tax evasion; although short of HMRC’s £4.56bn target, £4.32bn was collected between 2006 and 2011.

Head of the National Audit Office (NAO), Amyas Morse, said:

“This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which strengthen HMRC’s compliance work in future.

“The department could, though, achieve better value for money from its investment in compliance work by improved understanding of the impact on individual projects and ensuring that its staff have the capacity to exploit new systems in full.”

In 2011 Government funded HMRC with £917m to reduce uncollected tax by £7bn a year by 2014/2015.

HMRC responded by promising to adopt a tougher stance on tax avoidance and tax evasion measures in a bid to reduce the £34bn tax deficit in the UK.

Kevin Kinsella Jnr, of KinsellaTax, said:

“Management accountants who generally prepare budgets almost always know that budgets usually fail to achieve the figures quoted. This is another case where “estimates” are given gut frankly other than for the media they are not worth the prayer they are written on.

“At Manchester University when I read economics every statement was qualified by the words ‘ceteris paribus’ (meaning all things being equal) – how many times were all things equal? Not many. Put budgets and estimates in the same category and you won’t be disappointed.”

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